"mm's can't pay a dividend with restricted shares if they only get enough "restricted shares" for the real shares."
MMs do not handle the dividends/shares, the Transfer Agent and DTCC handles that and at that point if there is a short it will be addressed. You are correct in that it may cause a run on the company we are receiving dividend shares on, but unlikely to a large extent as the large brokers TDA, Scottrade, Etrade, etc., have their own respective MMs, and they all will work together to provide what is necessary for their benefit. It is also unlikely the goldco has been cellarboxed and is at bottom as we have been here, so the naked short issue may not be applicable
That is what gets the MMs out now, they dont want to have to pay divis on counterfit shares (which they are required to do) they would have to settle those divis on counterfit with cash
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